Healthcare Reform – Quotes from HHS Secretary Alex Azar

June 11, 2018

In early May, Secretary of Health and Human Services, Alex Azar, was delivering a speech to the Federation of American Hospitals. He had these simple words to share:

“Imagine a day when healthcare delivery in the United States functions the way other parts of our economy do. We as patients would pick providers with the level of information we have when using Amazon or Yelp. Consumers would drive quality and cost-effectiveness with information, competition and genuine choice.”

“The Secretary’s key word is ‘function.’ Right now, at 18% of GDP and expanding, our healthcare system is entirely dysfunctional. A measure making its way toward the November ballot in Colorado is the first and only active effort in the nation that truly addresses this. That’s why every American should support the people of Colorado right now.”

Secretary Azar continued during his May speech with the following:

“Some argue healthcare is simply different and is and should be immune from market forces. I simply disagree. Real competition — in the economic sense — has never really been fully tried in our bizarre, third-party payer system.”

And I just came across this report in the American Journal of Medicine. The study repeats a study that was done in 2016, using a common medical procedure (hip replacement, formerly referred to as Total Hip Arthroplasty, or THA) as a proxy for transparent pricing. They looked at the period 2012 through 2016. Here is its conclusion:

“We found no evidence of improvement in hospitals’ ability to provide estimates on reductions in the estimated price for THA between 2012 and 2016. Our results provide sobering evidence that substantial efforts from government and industry to improve price transparency have had little tangible effect on availability of prices.”

In fact, the study suggests we’ve gone backwards.

The study itself is an illustration of why our system is so broken. While the data is credible, the academic-speak that stands between it and real change is palpable. I also find words in the study’s discussion naïve when it cites, “…substantial efforts from government and industry to improve pricing transparency have had little tangible effect on availability of prices.” Really? Substantial effort? While the study’s authors rely on data to conclude no progress has been made, I have to wonder what data led them to believe there had been “substantial effort.” The truth is that numbers don’t lie, and the lack of progress clearly tells us that there’s been no serious effort, just five years (the time between studies) of excessive profit-taking on the basis of price obfuscation and collusion.

We often talk about the waste in healthcare—waste due to unnecessary tests and procedures, redundant testing, and a highly corrupt and inefficient system of claims management. Perhaps it’s time to start talking about the reciprocal of waste: excessive, uneconomically earned profit. You see, that trillion-plus dollars a year we waste has to go somewhere, and much of it goes to the bottom line of monopolistic healthcare giants. One man’s waste is another’s profit. The Affordable Care Act (aka Obamacare) is a case in point. One of the many unintended consequences of Obamacare has been the transfer of great wealth from patients and tax payers (which is really one and the same) to the healthcare industry. States were promised that coverage for more people would mean increased patient volumes, thus driving down costs (as happens in every other industry). Yet the opposite has happened. Prices have gone up—and taxpayers are paying for it. How can that be? Easy—without competition, there’s no linkage between volume and cost.

The ineffectiveness of government, and legislatures, leaves us no choice. The people have to take charge. That’s why we need your support.

Last week, Senator Coburn helped us raise over $100,000 from outside the state in a single day. That’s terrific, but it’s also a concern. As the Senator said, “Every American should be supporting the people of Colorado right now.” If you live in Colorado, please help me ensure the rest of the country knows, “we’re in.” And if you don’t live in Colorado, please consider supporting us anyway. What we are doing in Colorado is for every American.

I’ll close with one last excerpt from Secretary Azar’s speech:

“Simply put, our current system may be working for many. But it’s not working for patients and it’s not working for the taxpayer.”

If you read between the lines, “the many” does not refer to many Americans. It refers to many healthcare industry giants.

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